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FTC Finalizes Rule on Business Impersonation Scams

  • March 8, 2024

ACA International supported the rule to stop the scams, which have impacted nonprofit associations through trade show attendee lists and fraudulent use of logos.

3 minute read

The Federal Trade Commission’s Government and Business Impersonation Rule was finalized last week, giving it additional tools to stop scammers who impersonate businesses or government agencies, according to a news release.

The tools include directly filing federal court cases to mandate scammers return the money they earned from government or business impersonation scams, the FTC reports.

ACA International was part of a coalition of more than 200 trade associations and professional organizations that supported an expedited approval of the final rule from the FTC, ACA previously reported.

The FTC saw a sharp increase in these scams at the beginning of the COVID-19 pandemic and more than 2.5 million in total from 2017 through the middle of 2022. Government and business impersonation scam reports to the FTC also increased in 2023, according to the news release.

As an example of an association impacted by a scam connected to its trade show, the Consumer Technology Association, which owns and produces CES, “has received at least a half dozen reports of impersonation scams using the CES logo, during and in the two months following this year’s show. These impersonation scams varied from the sale of false discounted badges to fraudulent websites offering hotel bookings for CES,” according to the coalition’s letter supporting the rule (PDF).

The rule (PDF) will take effect 30 days after publication in the Federal Register.

Once in effect, according to the FTC, the rule will enable the commission to directly seek monetary relief in federal court from scammers that:

  • “Use government seals or business logos when communicating with consumers by mail or online.
  • Spoof government and business emails and web addresses, including spoofing “.gov” email addresses or using lookalike email addresses or websites that rely on misspellings of a company’s name.
  • Falsely imply government or business affiliation by using terms that are known to be affiliated with a government agency or business (e.g., stating ‘I’m calling from the Clerk’s Office’ to falsely imply affiliation with a court of law).”

Proposed Rule Prohibiting Impersonation of Individuals

The FTC also approved a supplemental notice of proposed rulemaking (SNPRM) (PDF) to prohibit the impersonation of individuals that would extend the protections in the final rule on government and business impersonation.

The proposal is in response to increasing complaints of impersonation fraud, such as “grandparent or romance scams” and the harm it causes to consumers, according to the FTC.

The complaints were shared with the FTC through comments on the government and business impersonation rule. For example, multiple individual commenters documented their experience with impersonation of real or fictitious individuals.

“One individual commenter reported receiving a call from an individual falsely posing as her grandson and requesting bail money and stated, “it is very easy to give them a lot of money because they [] sound so true and reliable and all that and they are just taking money from elderly people hand over fist,” according to the FTC.

Another commenter, NAAG, said impersonators “often use other companies’ products and services to execute their scams,” such as “marketing companies, call centers, attorneys, third-party mailing services, payment processors, lead list providers, remote offices . . . [d]ating websites, and social media.”

Scams driven by artificial intelligence increase the risk of impersonation fraud. The FTC is also seeking comment on whether the SNPRM should make it illegal for a firm “such as one with an AI platform that creates images, video, or text, to provide goods or services that they know or have reason to know is being used to harm consumers through impersonation.”

The SNPRM will be open for public comment for 60 days after publication in the Federal Register.